TWEED Shire Councillor Katie Milne's political future is in doubt after the NSW Supreme Court ruled she defamed billionaire developer Bob Ell and ordered her to pay him $15,000 in damages.

The ruling on Friday comes on top of previous costs of about $50,000 awarded to the founder and executive chairman of Leda Developments in interim arguments during the same case.

A hearing to determine costs associated with the latest proceedings will be held next month.

The payouts have the potential to bankrupt Cr Milne rendering her ineligible to remain a councillor under the Local Government Act.

The court action stemmed from a letter to the editor written by Cr Milne in which she linked Mr Ell to murdered Sydney businessman and standover man Michael McGurk and made references to Mr Ell's political donations.

The letter called for the council's treatment of Leda's two Tweed mega residential developments Kings Forest and Cobaki to be independently reviewed.

It was distributed via email to 70 addresses including various media outlets, in March 2010.

Cr Milne's barrister argued that the letter was in the public interest.

But Judge McCallum ruled that: "None of the documents in evidence, nor any interference that may be fairly drawn from them, reasonably sustains a finding that Mr Ell attempted to buy the favours of the NSW State Government and the Tweed Shire Council."

"The imputations on which Mr Ell has succeeded are serious."

The maximum payout is $355,000.

But Justice McCallum took into account the "limited extent of publication established on the evidence and the fact that the award is confined to damage to Mr Ell's presumed reputation with no component for distress or hurt to feelings."

Mr Ell did not give evidence, call any witnesses nor attend any part of the hearing.

Comment is being sought from Cr Milne.